Government planning to revive BSNL and MTNL with a Rs 15,000 crore merger: Report

BSNL and MTNL have been struggling to generate revenue for more than a decade now and it worsened with the entry of Jio. Hence, the government is planning to revive the state-run telcos. According to a report from IANS, the revival plan will cost approximately Rs 74,000 crore of which Rs 22,000 would be used for acquiring 4G spectrum and for the voluntary retirement scheme (VRS). The Union Cabinet has approved the 4G spectrum allocation to merge BSNL and MTNL while allowing them to raise sovereign bonds of Rs. 15,000 crores for their revival. 

As of now, MTNL operates in Mumbai and Delhi, whereas BSNL operates in rest of India.  The estimated loss for BSNL in 2019 is Rs 14,000 crores. While MTNL is listed, it has its net worth already eroded. The current employee count of BSNL is around 1,63,500, whereas MTNL has around 20,000 employees. The PSU’s merger has been a point of discussion for over 10 years now, but it couldn’t be taken up due to HR and listing issues.

After the cabinet briefing, Telecom Minister Ravi Shankar Prasad said, “BSNL & MTNL will raise a sovereign bond of Rs. 15,000 crores for their revival and assets of both the PSUs worth Rs. 38,000 crores will be monetised. The cabinet also approved an attractive VRS package for the employees which has been slightly tweaked from the original Gujarat model. Government will provide 4G spectrum on an administrative allocation basis. The cabinet has also given in-principle nod to the merger of BSNL and MTNL and till modalities are in place, MTNL will be a subsidiary of BSNL."

The revival plan will help BSNL to compete with private telecom companies in a better way. The telcos will receive the revival package in another month or so.

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